Law Practice Management-- How To Determine Your Charges
Identifying charges is a difficult law practice management task for most lawyers when thinking through their law company marketing strategies. In determining fees for specific services, lawyers often fall short of what they need to charge. Too numerous attorneys are scared of even charging the competitive price for their services when making their law company marketing strategies.
Before you sit down and begin believing through your law practice management pricing technique you need some distinctions around prices frequently used in law company marketing preparation. Do understand a law practice management law company marketing strategy is not efficient if you only attract individuals who want to pay the most affordable charge for a service. Rather, you want to focus your law practice management and law firm marketing strategies on bring in customers who will end up being long term properties to the firm.
There are essentially four methods of identifying just how much you should be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Pricing
This is one great method of determining rates. Get your assistant to support you in this law practice management task and invest a long time finding what the range of pricing remains in the neighborhood. Have her do a "mystery buyer" study by calling around as if he/she were a possible client and learn what your rivals state on the phone to her around prices. She may need to call from her house phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and offer to exchange your fees for their fees or you might do that with other lawyers yourself in your market. If you actually want to enter it and have maximum data you can write possibly a couple of lots competitors in your marketplace and say you are doing a fee survey and if they would send you their charge list you will produce a composite list that does not identify those responding and send them a copy of the results. To keep it basic for them include a stamped, self-addressed envelope with a list of the most typical services provided in your practice area. Now you will see what people are charging for services comparable to those you offer. You should have the ability to create a series of costs. Utilize this range to set prices for your own services. My recommendation in law firm marketing planning is to charge at the 75% level of the list. You ought to be at or in the top 25% of the fees.
Bear in mind that in basic it is not a excellent law practice management method to compete on rate. A lot of prospective clients will see rates that is too low as a signal that there is something missing either from the service, the supplier, or the firm. And individuals who are searching for a low cost will follow that low cost wherever they can discover it instead of ending up being long-lasting clients. Be sure that your price covers your expenses and a reasonable earnings margin.
The Expense Method in Law Practice Management Rates
This law practice management pricing method is extremely simple really. The most typical error in law practice management using this method is to neglect to include some type of your cost.
In law practice management frequently you count yourself out of the expenses and you need to include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all three of these in one, you need to think about one income as due you for your time and knowledge as the specialist and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Pricing
This is the approach utilized by numerous auto mechanics (it is called "the flat rate book") and other company. This technique is where you determine a fixed rate visit homepage for different jobs and charge that rate no matter what. If the mechanic invests less time than allotted for the job, he makes more. If he spends more time than allotted, he earns less. However in the end, all of it levels (well, typically to the mechanics' favor if you ask me). Another example utilizing this method is how handled healthcare has used this system with medical professionals and medical facilities . If they want, lawyers can use this system.
The "Rule of 3" in Law Practice Management Rates
This " guideline of thumb" called the " guideline of three" used in law practice management is not what your CPA may inform you and it does not fail you either. Ask your CPA what they think about it and they will like it. To begin we are going to be believing in thirds. For the very first third we will take the overall amount of salaries/bonuses (not benefits just incomes-- benefits enter into the second 3rd following) for the profits generators and/or timekeepers (this includes you if you are creating profits) and call that our first 3rd. So accumulate the salaries of the lawyers, paralegals, and legal secretaries who create income or are timekeepers and call this your very first third (lets simply say that number was $100,000 to keep it basic). Whatever that number is take that number once again and it is your second third which we will call your "overhead" ( therefore that 2nd 3rd is $100,000 and do not forget you if you are doing some handling partner type duties since that part of your time goes here in overhead). Take that exact same number and we will call that your last 3rd, which we will call gross profits (another $100,000). What you require to do is take the total amount (in this example $300,000) and now determine how much you need to charge per billable hour, per repaired rate or the number of contingency fee cases won to be sure you hit the target we need to hit provided our very first third number times 3 (in this example $300,000).
This method reveals you how much per hour you require to charge. If you are the owner of the practice you deserve a fair profit as well don't you agree? If this method is a bit too confusing do feel free to contact me and I will assist you sort it out in a couple of minutes on the phone.
It is a great idea to think through all of these prices techniques in identifying your law practice management prices technique before setting a cost and moving ahead with a law office marketing strategy to ensure you are thoroughly checking out all alternatives. Keep in mind the tendency for the majority of attorneys is to price too low. Do not do that! In another post I will tell you how to speak to possible clients so you never ever have a problem getting the cost you should have.